MINT HILL, NC – Currently, it doesn’t matter which metric you choose, home sale prices are at record highs. Throughout most of the United States, prices are not expected to cool off any time soon.
For many experts, this brings back thoughts of the 2000s when the big crash came. However, this real estate market is much different compared to the 2000s.
The market of the 2000s was driven by bad mortgages and bad appraisals. The junk mortgage loans lead to a very weak foundation, which caused the crash. Today’s market is rather different. Let’s look at a few reasons why this current market isn’t a bubble like the 2000s.
Stronger Lending Standards
There isn’t a huge credit boom like there was in the 2000s. Instead, banks and lenders have enforced more stringent standards. This has actually led to a lower ratio of real estate loans compared to total loans.
It’s more common to find a boom-and-bust real estate crisis due to lending bubbles. Right now, there isn’t a lending bubble. Instead, there is a supply and demand imbalance causing the hot market.
Another reason many believe this real estate boom isn’t going to be a bubble is the shortage of homes. In 2008, the real estate crisis wasn’t due to fewer homes on the market.
Today, one of the main reasons for lower inventory is the pandemic. However, the boom is also being caused by many buyers looking for homes due to higher savings rates during the pandemic and stimulus packages.
Homes are Currently Affordable
On the surface, rising home prices make it seem like homes are not that affordable. However, mortgage payments for homes in the United States are at a very low percentage of household income. This means more people are able to afford a home than before even though prices are on the rise.
Lower interest rates are helping to keep homes affordable, for now. While things can certainly change, right now, this boom does not show signs of being a bubble.
Realtors are reporting low home inventory and rising home prices. However, many believe prices still have a ways to climb before buyers can no longer afford homes. As long as interest rates remain low, there will continue to be no signs of a real estate bubble.
I would love to be part of your journey when the time is right for you. If you ever have a real estate question or need, or know someone who does, trust that you can turn to me. I will help you make the right move! Anna Granger (704) 650-5707 | email@example.com | www.1stchoicepropertiesinc.com